Virtualization certanly is one of the biggest contributors to the fall of sales.

And one going on for some time. Folks running servers want to drop costs, and everyone is realizing server utilizationcould be improved.If you can make better use of the servers youhave, you don't need to buy new ones as often. And the more servers ou have, the higher your power bills, and data center power costs are an increasingly large factor.

Gaming is used to being one of the driving force of an upgrade.

But Intel gets benefit from that only as a side-effect. For high-end gamers, the video card is for more important than the CPU, and Intel has never neen a leader in that area. Intel's graphics have historically been poor.

In the meantime, what will Intel do?

What it's doing - hunker down, cut expenses, and wait for a recovery in the market.

I'm not. This has been happening as long as I've been paying attention. Intel (and other capital intensive outfits) drop capex when there is a drop in sales/revenue/profit. Capex is an expense, and when your numbers are off you look to cut expenses. When things improve, you boost them again.

We don't know what Intel's priorities are, so we can't know precisely which projects are affected, but I suspect Intel has a methodology for determining what efforts get reduced/dropped when they feel they need to make cuts.

Come to think of it, it might actually make more sense to lump tablets in with traditional PCs in terms of forecasting. Obviously, PCs tend to cost more (though not that much in some cases- I know you can get a laptop for less money than a top of the line iPad). But PC margins are razor thin. I'm sure tablet margins are too. I would think the semiconductor content is similar, right?

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